ANALYSIS: Sports Drinks Step Up the Pace
Lucozade has begun a burst of activity to tighten its grip on an accelerating sports beverages market, writes Daniel Rogers.
The past few months have seen soft drinks-to-drugs conglomerate GlaxoSmithKline (GSK) up the ante in the sports drink wars.
Having signed England rugby ace Jonny Wilkinson at the beginning of the year to endorse its Lucozade Sport brand (Marketing, January 6), GSK last week announced the establishment of the Lucozade Sport Science Academy (LSSA) to share knowledge about sports nutrition, and has slapped the LSSA logo on its range of products to add authority.
At the same time, GSK has repackaged the Lucozade Sport range, introducing a 'running man' logo developed by design agency Sea Change. A spokesman said the look had been 'inspired by classic sports brands such as Nike, Adidas and Oakley'. And this week GSK launched yet another brand extension, Hydro Active.
'It's the most active Lucozade Sport has been in the market since we launched in 1991,' admits Peter Harding, former GSK Healthcare marketing director and now general manager of its Ireland operation. 'But as market leader, we need to drive market growth.'
Predictions for growth
Lucozade's burst of activity is partly due to a desire to tap into an adrenaline-fuelled market.
ACNielsen figures show the UK market's value to January 25 grew by 34% year on year to pounds 59m. AC-Nielsen also suggests it is growing three times faster than the broader, better-known energy drinks sector, which includes brands such as Red Bull and Lucozade Energy. Zenith International predicts sales volume is increasing by up to 40% annually.
For this reason, earlier this year GSK created a separate advertising account for Lucozade Sport, handing the advertising element of the expanded pounds 22m annual promotional budget to M&C Saatchi.
The agency's joint chief executive, Nick Hurrell, says his agency has been charged with 'adding more muscle' to the Lucozade Sport brand.
The sector's growth shows little sign of abating. Gary Roethenbaugh, Zenith's research and development director, says: 'We are predicting at least double-digit growth for the foreseeable future.'
The UK is a relatively young market for sports drinks. The first brand was called Dexters and appeared in the mid-80s, with GSK creating a Lucozade sport variant a few years later. The market began to accelerate in the 90s, with Boots selling an own-label product and Novartis introducing its Isostar brand.
But in the past few years this sector has broken into a sprint, moving out of specialist health and sports shops and into garages and newsagents for impulse buys.
'The growth is partly due to the shift toward healthy lifestyles,' explains Roethenbaugh. 'People are flocking to gyms and running is ever more popular. At the same time there's an increasing awareness of the benefits of hydration and carbohydrates to sporting performance.'
And Roethenbaugh believes enticing marketing opportunities contribute to a virtuous circle. 'Sports drinks offer marketers a specific consumption occasion. It is easy to tap into consumer demand in this market and some big firms are spending lots of money on promotion, accelerating the market.'
The timing of Lucozade's activity can also be explained by GSK's determination to exploit what it views as a closing window of opportunity. While it remains the clear market leader, with about 70% share of the market, GSK is aware of the threat presented by global soft-drinks heavyweights Coca-Cola and Pepsi in this market.
While GSK may be one of the UK's biggest companies, it fears the distribution and marketing might of two of the world's biggest brands. …